What are the scope of participative management?

Scope of workers’ participation in management

Table of Contents Show

Objectives of Participative Management
Forms or Levels of Participative Management
(introduction...)
4.2 Forms of joint consultation and employee participation
(introduction...)
4.2 Forms of joint consultation and employee participation
(introduction...)
4.2 Forms of joint consultation and employee participation

Scope of workers participation ranges over three managerial decision-making stages.

Social Decisions: Hours of work, welfare measures, work rules, safety, health, sanitation and noise control.

Personnel Decisions: Recruitment and selection, promotions and transfers, grievance settlements, work distribution

Economic Decisions: Methods of manufacturing, automation, lay offs, shut-downs, mergers and acquisitions and other financial aspects.

Participative Management refers to the technique of inviting members of the organization to take an active part in the organization-wide decision-making process. This approach is followed by the organizations which value the relevance of human intellect and strives for developing a good relationship with their personnel.

That is why, it is also called as Participative Decision Making, Employee Involvement or Industrial Democracy. It comprises of various elements including increased communication and cooperation, joint decision making, quality circles, quality of work-life, increase in job satisfaction, conflict resolution, etc.

It is regarded as an open form of management, as it includes all those members in the decision making of the company, who are likely to be affected by the decision. It ensures that the needs or concern of every member will be satisfied. And for this cooperation of organizational members is a must.

Objectives of Participative Management

Participative Management is a tool for increasing the productivity and efficiency of the organization, as well as building strong relations with the workers and employees. The objectives of Participative Management are:

To encourage harmonious relations between the company’s management and workmen.
To develop mutual trust and understanding amidst the company’s management and workmen.
To ensure a considerable level of job satisfaction.
To give the opportunity to the workers to freely express their views towards the company’s goals and laws.
To attain a significant increase in production.
To provide welfare facility to the workmen.
To give training to the workers in understanding as well as sharing the responsibilities of the management.
To facilitate teamwork.
To develop a dynamic human resource.
To decrease labour turnover and absenteeism.

At present, many organizations have adopted this concept, as it encourages open and unbiased communication, which not just help in the company to grow, but also maintains transparency in the company’s operations. It also gives freedom of expression to the employees. Moreover, it also increases job satisfaction in the employees.

Forms or Levels of Participative Management

The ways in which workmen can take part in management is called forms of participation. There are a number of forms in which Participative Management exists, wherein the level indicates the extent and depth of employee’s participation in the management. Come let’s discuss the various forms/levels of participative management:

Informative Participation: In this type of participation, members are entitled to receive information, discuss and offer suggestions or express their views on various issues of general economic importance.
Consultative Participation: As the name suggests, the organization’s management consults with the workers on various matters of employee welfare like working conditions, safety and health. But, the ultimate decision is taken by the company’s top-level management and the views of the employees are taken into account while deciding on the matter. This means that it is up to the discretion of the management, to accept or reject the suggestions.
Associative Participation: It is the extended form of consultative participation, as in such participation, the company management is morally obligated to adopt and execute the unanimous decisions and suggestions of the workers. And so the management and workers of the organization participate in the decision jointly.
Administrative Participation: In administrative participation, the level of authority sharing is higher. It facilities freedom to the employees in exercising administrative and supervisory powers.
Decisive Participation: It implies the greatest level of participation, which involves complete sharing of decision making, and the delegation of authority is maximum at this stage. Therefore, joint decision making is there, where workers actively participate.

The levels discussed above showcase increasing degree of worker’s participation in the management depending upon the nature of functions, worker’s strength, department, etc. In this, informative participation is the lowest and decisive participation is the highest form of participation in an organization.

The concept of participative management is a universally accepted one and that is why it is implemented by many organizations, worldwide. The importance of participative management is:

The employees easily connect themselves with the organization, which results in improved performance.
It motivates employees, due to their involvement in the management.
It increases job satisfaction and cooperation of employees, which reduces conflicts in the workplace.
More commitment and dedication is seen in employees towards the achievement of goals.
It leads to good communication, as the work problems are shared by them mutually.

With this technique, the employees get an opportunity to share their ideas, suggestions and feedback regarding the company’s policies and decisions. Also, they feel responsible for the achievement of organizational goals.

(introduction...)

UNIT 4: LEARNING OBJECTIVES

Once you have learnt this unit, you will be able to:

1. Understand the concept of employee participation.
2. Understand different forms of employee participation and direct the concept towards improving productivity.
3. Ensure the effective administration of employee participation and institutionalize the system.

The term “participation” refers to the influence in decision-making exerted through a process of interaction between workers and managers that is based on information sharing.

Participative management is the process of involving subordinates in decision-making, stressing the active involvement of people at work. It uses their experience and creativity in solving important managerial problems. It rests on the concept of shared authority, which holds that managers share their managerial authority with their subordinates in the important decision-making processes of the organization, and not just in tangential problems or concerns.

The main objective of employee participation is to increase productivity for the benefit of the employees, the enterprise and the community, to give employees a better understanding of their role in the production process and to satisfy the workers' urge for self-expression, thus leading to industrial peace, better relations and an increase in effectiveness and efficiency.

The most important prerequisites of participation and participative management are:

- management's commitment to participative management;
- a supportive but non-interventionist labour policy:
- a fairly high level of industrialization of the economy and technology;
- a growing professionalization on the part of the managers;
- an educated and technically trained workforce:
- an increasing emphasis on human resources management and development;
- a strong but not aggressive trade union movement:
- a favourable political and conducive industrial relations environment; and
- a social and cultural milieu where democratic ideals and processes are accepted and practised.

A higher degree of employee participation is an important condition for moving towards a higher, more sophisticated level of industrial relations and labour-management consultation. The latter is a continuous dialogue between labour and management representatives about improving business strategies, introducing new technology, company restructuring, introducing the best work practices, and improving working conditions and job security and the general quality of working life. The main difference between labour-management consultation and collective bargaining is that, if the latter is built around sharing the results of production between labour and employers, the former is focused on creating greater wealth, income, profit and productivity. Their distribution is of secondary importance, and is agreed upon in advance according to specific formulas, which do not change often.

The most important issues and subjects relating to joint consultation and employee participation are normally work-related issues, employee-related problems and the identification of the characteristics of effective employee participation for developing a system that is suited to the specific organization.

Now please discuss this case with a colleague or a group.

Case: Whose fault?

Mr. Roberts joined the Empy Containers Company as personnel officer a year and a half ago. One day, the general manager called him to his office and told him that the works manager had complained that Mr. Roberts was very slow in taking disciplinary action against workers, although the foreman had submitted written reports on their conduct.

“Sir, did he tell you of any particular case?” Roberts asked. “Yes, about the case of the oiling department worker, Kensington. It seems that he deliberately did not follow the agreed procedure regarding changing the oil, in spite of being reminded by the supervisor. The maintenance engineer's report, with the works manager's recommendation that Kensington should be suspended pending inquiry, has been with you for over a week without anything being done about it,” said the general manager.

“Oh, that case, sir! I have not forgotten it. I was making some preliminary investigations. The union secretary told me about a month ago that the supervisor would settle the matter somehow. Kensington is a hardworking employee with years of service. Apparently, some time ago there was a lot of talk about heavy oil consumption by the oiling department. Kensington was concerned about it; it appears that he had thought about the problem. He had then suggested a change in the oiling method, so that the oil wastage could be minimized. The machining department foreman had thought this a good idea, when Kensington had casually mentioned it to him. Kensington mentioned it to his supervisor and a few fellow-workers. The supervisor told him that he had to talk with his boss and only then would it be tried out. Nothing happened for about three months. Kensington tried to change the method on one machine without the supervisor's knowledge, for which he got a written warning. Kensington then approached the union secretary, who told him that he would take it up with the management. The union secretary spoke to the maintenance department head, who promised to look into the matter.

In the meantime, the works manager had planned to inspect the oiling department; hearing this, Kensington had used the changed method of oiling on a machine, to demonstrate it to the works manager. Unfortunately, the works manager could not visit the department. But the maintenance department head, who had gone round the oiling department, was told of Kensington's action. He was annoyed and sent a strong complaint to the works manager, who has now forwarded it to me with his remarks. Should I suspend Kensington, sir?” asked Roberts. The general manager is wondering how such a situation could have been avoided. He also is thinking about who was at fault - Kensington, Roberts or the oiling department? What is your advice?

4.2 Forms of joint consultation and employee participation

The most important method of developing joint consultation and worker participation is co-determination. This is the process of joint decision-making by the representatives of the shareholders and the employees, based on the principles of parity of representation and complete information-sharing on all matters that affect the interests of the employees and the enterprise.

The common forms of employee participation and joint consultation derive from the active use of the various kinds of small group activities and mechanisms, such as:

- employee stock-ownership plans;- joint management councils;- Lernstatt (see box below);- Quality Control Circles;- works councils/committees, etc.;- suggestions schemes;- grievance procedures and machinery;- safety committees; and
- employee welfare committees.

Most of these, as well as some others, have already been discussed in other modules, e.g. Module 7, “Organizing a Company Productivity and Quality (P & Q) Movement”, Module 9, “Total Quality Management”, Module 14, “Productivity Motivation and Gainsharing”, etc. However, here we should like to describe the Lernstatt system, which is not often mentioned in the literature but deserves particular attention since it integrates social and productivity concerns in its activities (see box).

Lernstatt

The term Lernstatt is derived from two German words, Lernen and Werkstatt, which mean “learning” and “workshop”. The most important element of the system is the Lernstatt group, consisting of ten to 12 workers who usually meet for about 50 minutes once a fortnight. Each group is led by two moderators.

This is a small group activity about learning to work better through teamwork, and about problem solving. It seeks to realize full human potential through teamwork by learning with and from each other. It helps to improve employee participation, promote teamwork, strengthen working and interpersonal relationships, increase employee satisfaction and education, improve communication, motivation and quality, make employees aware of the latest technology, and infuse a problem-preventing attitude, safety awareness and cost consciousness. It is a process that helps to enhance the competence of employees by increasing their knowledge regarding the products, the workplace and the working environment, the company, the market situation and the competition. Employees are encouraged to take the initiative in developing new ideas and overcoming problems.

To develop an effective system for employee participation in productivity improvement, the following elements should be presented in any productivity improvement programme:

- consult with and involve employees and trade unions in designing the structure and contents of the participative management mechanisms;
- train employees in the participative processes;
- train supervisors and middle-level managers in the consultative and decision-making processes;

- have a regular review of the functioning of the participative forums by the top management;
- implement the decisions taken by the participative forums and provide feedback on implementation to the employees; and
- gradually expand the scope of participative management forums and employee representation.

Please read the following case very carefully and discuss its relevance to your own country's experience:

Case: Germany

In Germany industrial relations at the plant level are regulated by the Works Constitution Act. This law provides the works council with a variety of different-level rights to co-determination, consultation, and information on social and personnel matters, in questions pertaining to the organization of work and vocational training, and with respect to so-called “economic matters”.

However, this legislation imposes limitations not only on the manoeuvrability of management, but also on the scope of the works council. Thus the latter is bound by the “peace obligation” - that is, the works council is not allowed to take industrial action but has to refer conflictual matters to arbitration or appeal to the labour court. Its threatening potential thus is limited. Moreover, the works council can break off cooperation with management. If it is true that the works council is in a position to set limits to the latitude of management, it is also true that management is able to gauge the behaviour of works councillors. There is no asymmetry of power. The requirement to observe the peace obligation formally applies to both sides, but materially almost exclusively affects the works council (and the workforce). The legitimacy of these regulations is unquestioned among the representatives of the interested parties.

The works council is an institution fully accepted by the company director and the entire company management. However, the position of the works council in the firm is dependent on the specific function assigned to it by the company management. This function consists of the works council performing subtasks of a staff division concerned with “company order and social matters”. A major task of the works council is to “get things straight” concerning the issues arising in the firm's day-to-day functioning. It thus complements and in part even replaces the personnel department. The assignment of such regulative functions to the works council requires a high degree of consensus to exist with respect to the use of labour and the general company objectives. The works council also assumes the functions of an “ombudsman” and “trouble-shooter”. Thus, the works council is expected to make manageable personnel conflicts (e.g. grievances, complaints) that may arise at the department or workplace levels through taking action in terms of securing reasonable company management.

The adoption of these functions provides the works council with an unchallenged “managerial position” regarding the everyday problems arising in the firm. Production manager and works council chairman often sit together to discuss, and often immediately resolve, problems of labour utilization as they arise.

Apart from his participation in the settlement of the firm's day-to-day problems, the chairman of the works council is involved in another institution which, next to the authority of the company director, is the major decision-making body in the firm. This institution performs the function of an in-house “centre for social matters” and is composed of the production manager, the personnel manager and the works council chairman. This “tripartite board” takes action in cases of transfers, displacements, or requests for upgrading and the like. Although the company director has reserved for himself the right to take the final decision on any issue, this tripartite board is to be seen as an important instrument of overall company management.

Source: Gladstone and Ozaki, 1991.

Questions for discussion

1. What is the concept of employee participation in management and/or decision-making and what are its scope, objectives and prerequisites?

2. Discuss different forms of employee participation and identify the features that have contributed to their success in productivity improvement and industrial relations.

3. What is the significance of small group activities for promoting employee participation and productivity improvement?

Page 2

The term “participation” refers to the influence in decision-making exerted through a process of interaction between workers and managers that is based on information sharing.

The most important prerequisites of participation and participative management are:

- management's commitment to participative management;
- a supportive but non-interventionist labour policy:
- a fairly high level of industrialization of the economy and technology;
- a growing professionalization on the part of the managers;
- an educated and technically trained workforce:
- an increasing emphasis on human resources management and development;
- a strong but not aggressive trade union movement:
- a favourable political and conducive industrial relations environment; and
- a social and cultural milieu where democratic ideals and processes are accepted and practised.

Now please discuss this case with a colleague or a group.

Case: Whose fault?

Page 3

(introduction...)

UNIT 4: LEARNING OBJECTIVES

Once you have learnt this unit, you will be able to:

1. Understand the concept of employee participation.
2. Understand different forms of employee participation and direct the concept towards improving productivity.
3. Ensure the effective administration of employee participation and institutionalize the system.

The term “participation” refers to the influence in decision-making exerted through a process of interaction between workers and managers that is based on information sharing.

The most important prerequisites of participation and participative management are:

- management's commitment to participative management;
- a supportive but non-interventionist labour policy:
- a fairly high level of industrialization of the economy and technology;
- a growing professionalization on the part of the managers;
- an educated and technically trained workforce:
- an increasing emphasis on human resources management and development;

- a strong but not aggressive trade union movement:
- a favourable political and conducive industrial relations environment; and
- a social and cultural milieu where democratic ideals and processes are accepted and practised.

Now please discuss this case with a colleague or a group.

Case: Whose fault?

4.2 Forms of joint consultation and employee participation

The common forms of employee participation and joint consultation derive from the active use of the various kinds of small group activities and mechanisms, such as:

- employee stock-ownership plans;- joint management councils;- Lernstatt (see box below);- Quality Control Circles;- works councils/committees, etc.;- suggestions schemes;- grievance procedures and machinery;- safety committees; and
- employee welfare committees.

Lernstatt

To develop an effective system for employee participation in productivity improvement, the following elements should be presented in any productivity improvement programme:

- consult with and involve employees and trade unions in designing the structure and contents of the participative management mechanisms;
- train employees in the participative processes;
- train supervisors and middle-level managers in the consultative and decision-making processes;
- have a regular review of the functioning of the participative forums by the top management;
- implement the decisions taken by the participative forums and provide feedback on implementation to the employees; and
- gradually expand the scope of participative management forums and employee representation.

Please read the following case very carefully and discuss its relevance to your own country's experience:

Case: Germany

Source: Gladstone and Ozaki, 1991.

Questions for discussion

1. What is the concept of employee participation in management and/or decision-making and what are its scope, objectives and prerequisites?

2. Discuss different forms of employee participation and identify the features that have contributed to their success in productivity improvement and industrial relations.

3. What is the significance of small group activities for promoting employee participation and productivity improvement?

Page 4

The term “participation” refers to the influence in decision-making exerted through a process of interaction between workers and managers that is based on information sharing.

The most important prerequisites of participation and participative management are:

- management's commitment to participative management;
- a supportive but non-interventionist labour policy:
- a fairly high level of industrialization of the economy and technology;
- a growing professionalization on the part of the managers;
- an educated and technically trained workforce:
- an increasing emphasis on human resources management and development;
- a strong but not aggressive trade union movement:
- a favourable political and conducive industrial relations environment; and
- a social and cultural milieu where democratic ideals and processes are accepted and practised.

Now please discuss this case with a colleague or a group.

Case: Whose fault?

Page 5

The term “participation” refers to the influence in decision-making exerted through a process of interaction between workers and managers that is based on information sharing.

The most important prerequisites of participation and participative management are:

- management's commitment to participative management;
- a supportive but non-interventionist labour policy:
- a fairly high level of industrialization of the economy and technology;
- a growing professionalization on the part of the managers;
- an educated and technically trained workforce:
- an increasing emphasis on human resources management and development;
- a strong but not aggressive trade union movement:
- a favourable political and conducive industrial relations environment; and
- a social and cultural milieu where democratic ideals and processes are accepted and practised.

Now please discuss this case with a colleague or a group.

Case: Whose fault?

Page 6

(introduction...)

UNIT 4: LEARNING OBJECTIVES

Once you have learnt this unit, you will be able to:

1. Understand the concept of employee participation.
2. Understand different forms of employee participation and direct the concept towards improving productivity.
3. Ensure the effective administration of employee participation and institutionalize the system.

The term “participation” refers to the influence in decision-making exerted through a process of interaction between workers and managers that is based on information sharing.

The most important prerequisites of participation and participative management are:

- management's commitment to participative management;
- a supportive but non-interventionist labour policy:
- a fairly high level of industrialization of the economy and technology;
- a growing professionalization on the part of the managers;
- an educated and technically trained workforce:
- an increasing emphasis on human resources management and development;
- a strong but not aggressive trade union movement:
- a favourable political and conducive industrial relations environment; and
- a social and cultural milieu where democratic ideals and processes are accepted and practised.

Now please discuss this case with a colleague or a group.

Case: Whose fault?

4.2 Forms of joint consultation and employee participation

The common forms of employee participation and joint consultation derive from the active use of the various kinds of small group activities and mechanisms, such as:

- employee stock-ownership plans;- joint management councils;- Lernstatt (see box below);- Quality Control Circles;- works councils/committees, etc.;- suggestions schemes;- grievance procedures and machinery;- safety committees; and
- employee welfare committees.

Lernstatt

To develop an effective system for employee participation in productivity improvement, the following elements should be presented in any productivity improvement programme:

- consult with and involve employees and trade unions in designing the structure and contents of the participative management mechanisms;
- train employees in the participative processes;
- train supervisors and middle-level managers in the consultative and decision-making processes;
- have a regular review of the functioning of the participative forums by the top management;
- implement the decisions taken by the participative forums and provide feedback on implementation to the employees; and
- gradually expand the scope of participative management forums and employee representation.

Please read the following case very carefully and discuss its relevance to your own country's experience:

Case: Germany

Source: Gladstone and Ozaki, 1991.

Questions for discussion

1. What is the concept of employee participation in management and/or decision-making and what are its scope, objectives and prerequisites?

2. Discuss different forms of employee participation and identify the features that have contributed to their success in productivity improvement and industrial relations.

3. What is the significance of small group activities for promoting employee participation and productivity improvement?

Page 7

The term “participation” refers to the influence in decision-making exerted through a process of interaction between workers and managers that is based on information sharing.

The most important prerequisites of participation and participative management are:

- management's commitment to participative management;
- a supportive but non-interventionist labour policy:
- a fairly high level of industrialization of the economy and technology;
- a growing professionalization on the part of the managers;
- an educated and technically trained workforce:
- an increasing emphasis on human resources management and development;
- a strong but not aggressive trade union movement:
- a favourable political and conducive industrial relations environment; and
- a social and cultural milieu where democratic ideals and processes are accepted and practised.

Now please discuss this case with a colleague or a group.

Case: Whose fault?